This latest article from UHY International looks at although Covid has had a devastating economic effect, in many regions the pandemic’s disruptive force is creating new opportunities and fostering entrepreneurship. 

opportunity from adversity, economic prosperityAs vaccine rollouts progress, economies are opening up again and businesses are gearing up to retake ground lost to the pandemic. Or at least, those that survived are. In the UK, a survey in January found that nearly 5% of small businesses expected to close in 2021. As shoppers and diners return, city centres around the world bear the scars of Covid in the form of shuttered shops and deserted malls.

Some economies fared worse than others, being in the centre of the pandemic’s firing line. Helena Budiša, managing partner of UHY’s Croatian member firm UHY HB EKONOM, says that economies that rely on tourism have been particularly badly affected by a pandemic that closed borders and grounded planes. “Covid has caused a deep crisis in Croatia, as in the rest of the world,” she says. “But it is also a wake-up call for Croatia and other tourism dependent countries.”


However, calamity is not the only story of Covid. Some sectors – IT, supermarkets, takeaway food – have thrived. Deprived of holidays, consumers turned to Netflix and home improvements. Sales of health and wellbeing products soared. Agile businesses that quickly implemented online ordering and delivery services found opportunity in adversity. As Helena says, “in every crisis there are winners as well as losers”.

That much is clear from the figures. Operational small businesses in the US declined by a quarter between January and December 2020, and yet the third quarter of 2020 saw more than 1.5 million new-business applications – almost double the figure for the same period in 2019.

Meanwhile, France saw 84,000 new business formations in October 2020, a fifth more than in the same month a year earlier. More new businesses were registered in the UK in the third quarter of 2020 than at any time since 2012. Entrepreneurs saw opportunities even in the midst of the crisis.

And as the health emergency gradually fades, this entrepreneurial activity is likely to accelerate. Evidence is mounting that the world will not remain in a Covid-related recession for long. In the US, for example, a combination of a large fiscal stimulus, lockdown easing and vaccinations fuelled a surge in consumer spending in the first quarter of 2021, with annualised growth hitting 6.4%.

And while China was first into lockdown, it was also first out. China’s industrial output grew by 35% in January and February, compared to the same months last year. Analysts are now predicting Chinese growth in 2021 of around 8%. Meanwhile, the EU is only now emerging from its most recent wave of lockdowns, but even here growth forecasts have recently been revised upwards to more than 4%.


Economists base their confidence on the belief that, while the global economy was plunged into recession in 2020, in many countries it was a recession like no other. Sadly, businesses went bust and many people lost their jobs. But on the flipside of the coin, many of those lucky enough to keep a stable job and income during the pandemic never felt so comfortably off. They never felt so bored, either. Savings grew because many consumers had nothing to spend their money on after covering the basic necessities of life.

Now those consumers are looking to make up for lost time, with results that will ripple through wider economies, from retail, leisure and hospitality to manufacturing, IT and professional services. At the same time, the pandemic has fundamentally changed the way many people shop, work and relax. Businesses that positioned themselves for success during Covid are likely to thrive in its aftermath.

“A number of businesses were positively impacted by Covid-19, in particular those operating in the technology and mobility sectors,” says Roberto Macho, managing partner at UHY Macho & Asociados, UHY’s member firm in Argentina. “They did well because trends that had started a few years ago by changing work and lifestyle habits were accelerated by the eruption of the pandemic. Those trends will continue.”


Nobody is underestimating the negative effects of Covid, or the challenges that companies face in its aftermath. In the post-pandemic world, real business acumen will be required to identify new opportunities. But those who do will be well placed to take advantage of improving economies and growing economic optimism.

Roberto adds that he is seeing many entrepreneurs looking to take advantage of the new environment, by thinking creatively and turning away from pre-pandemic certainties. “Even in the real estate business, for example, where people may feel there is very little manoeuvrability, I have witnessed a number of cases where entrepreneurs have converted the use of buildings for purposes more aligned with the new economy.”

Opportunities come in all shapes and sizes. Companies and consumers around the world upgraded their IT in response to the pandemic, and many will continue to invest in new technology over the coming months and years, as new ways of working and living evolve. A new enthusiasm for remote work, online retail and cashless payment is likely to survive the return to normality and drive a new wave of entrepreneurial activity.

For that reason, Helena and Roberto both pinpoint technology as a sector brimming with post-pandemic promise, at least in the short term. “In Croatia we saw an enormous growth in the entire IT industry during the pandemic, to the extent that it is, more and more becoming a dominant industry in the country,” says Helena. She mentions two technology companies that have both achieved unicorn status (startups with a value of over USD 1 billion) in the last year, “which says a lot, given that we are a small country of just four million people”.

It also says a lot that these businesses operate in entirely different sectors, though both are ostensibly technology companies. Infobip is an omnichannel cloud communications provider, while Rimac produces electric sports cars, drivetrains and battery systems. Both are positioned for further growth in a world changed by Covid, in which technology plays an ever greater role.

Helena adds that a number of clients in the hardware and software sectors have experienced significant growth. In Argentina, UHY Macho & Asociados has also seen the rapid expansion of fledgling technology businesses: “We represent a number of startup companies and have been witnesses to their exponential growth, operating in areas like online sales, e-learning and telemedicine,” says Roberto.


But technology is not the only game in town, especially as economies open up. After the experience of the pandemic, many companies are intent on implementing shorter, simpler supply chains, which will create opportunities in manufacturing and logistics.

Hospitality will benefit from consumer spending sprees. The pharmaceutical and chemical sectors did well during the pandemic and may be set for further gains on the back of a renewed focus on health at both individual and state level. And as Covid fades, the green economy will again become the centre of considerable attention.

In fact, as Roberto says, success is often less about the sector than the entrepreneurs themselves. To grasp new opportunities, businesses need foresight and agility. “Taking advantage of opportunities always involves a smart entrepreneur who can lead a business in times of huge change.”


However, the picture is not consistent, either globally or regionally, and there are questions about how long any post-Covid bounce will last. “We will have to wait and see whether these trends will last, or if we will go back to the way things used to be, as vaccines bring the pandemic under control,” says Helena.

Other regions have their own barriers to entrepreneurship at this time. “Almost all of my clients are just ‘battening down the hatches’, and very few are taking entrepreneurial risk by expanding or looking for other opportunities,” says Selwyn Cohen, partner at Cohen Fasciani, UHY’s member firm in Melbourne, Australia.

“At present the constraint to growth is people rather than funding. Unemployment is at an all-time low. It is impossible to hire fruit pickers, cleaners, waiting staff, IT people, construction staff and so on. The labour market is a barrier to growth.”

There are other potential brakes on an entrepreneur-led recovery, from protectionist economic policies to the potential for new Covid variants to send nations back into lockdown. But evidence suggests that the Covid-related recession, while highly destructive, is fundamentally different to downturns associated with previous global shocks. Businesses found new opportunities during the pandemic and will continue to do so as the pandemic fades. Covid’s disruptive power has breached the walls of traditional commerce, and entrepreneurs are rushing through the gaps.

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